Frequently Asked Question about Home Equity Financing

What are the interest rates on home equity loans?

Rates vary by lender, your credit score and the current market, but home equity loans and lines of credit have some of the lowest interest rates available in any type of loan - typically they are around the same for a home mortgage loan.

What if I can't pay my loan off?

Home equity loans and lines of credit are secured loans which means that if you will not (or cannot) pay off the loan, it will go into default and the lender will have the legal right to seize the property that was used to secure the loan in order to satisfy the debt. In the case of a home equity loan, since generally there is a mortgage still on the home from a different bank, the home may be seized by one and the proceeds will be split accordingly.

How soon can I get money from a home equity loan?

Home equity loans need to be processed much like a mortgage, though without quite as much escrow hassle since there is no legal requirement to prove that you are the owner of the home and allowed to sell it as with a home sale escrow. This means that the process can take several weeks for approval, but, if you have all of your paperwork together and are timely and cooperative with a potential lender, a home equity loan can be processed and approved in as little as two weeks.

What's the difference between Home Equity Loans and HELOC?

Home equity loans are best thought of as one-time affairs. Once you get a home equity loan, you receive a lump sum and a second mortgage to pay off. When it is paid off, if you need more money you will have to apply for a new loan. Home Equity Lines of Credit are revolving credit loans that you can take out money from as much as you want, as often as you want up to the limit of your loan. Like a credit card, you will have to make payments on a HELOC for as long as you owe money on it, and the payments will cease when you have paid back all you have borrowed, but you will be free to borrow more whenever you need it. One other difference between the two is that a home equity loan usually has a single, fixed interest rate that will not change while you are paying it off. HELOCs, on the other hand, will only have a fixed rate as long as you are making timely payments to the loan. If you become late or miss payments, like a credit card, the interest rate can increase, making repayment more difficult.

Does HomeFinanceDebt.com provide loans?

No, we do not. This site is not a lender. Once you are ready to apply for home equity loans or lines of credit you can fill out the simple, no obligation form on this site to be connected with lenders both nationally and in your area that may work with you to provide you with the loan you need. You can also look through more information about applying for home equity loans before you decide to apply.